Ormat Technologies Inc. (NYSE: ORA; TASE: ORA/a>) has successfully completed its bond issue for investment institutions in Israel, raising $204 million (NIS 765 million) in a private bond placement. Ormat today announced that demand had totaled $450 million (NIS 1.7 billion) in the tender conducted for its two new bond series.
Despite the large demand, Ormat elected not to raise the maximum sum it had intended - $250 million - probably in order to save future financing costs. Ormat will use the money raised, together with some of the cash it already has, to reschedule $250 million in debt - non-tradable bonds issued by Ormat to institutions in 2010-2011. This debt, which bears 7% annual interest, was due for repayment in August 2017.
Managed by CEO Isaac Angel and controlled by FIMI Opportunity Funds, Ormat deals in geothermal energy. "Globes" reported the company's bond issue six weeks ago.
Ormat's two bond series were rated A plus by S&P Maalot. Series 2, amounting to $67 million, was closed at 3.7% annual dollar interest. The duration of the series, which will be repaid in a single payment in September 2020, is 3.8 years. Series 3, amounting to $137 million, bears 4.45% annual interest. The duration of this series, which will be repaid in September 2022, is 5.5 years. Interest payments for the two series will be made twice a year, starting in March 2017. Discount Underwriting and Issuing and Leader Underwriters led the issue, together with Barak Capital Underwriting.
Oppenheimer Investment Bank began covering the Ormat share last week, with a "Market outperform" recommendation and a $54 target price, 10.4% higher than the current market price. Oppenheimer cites a number of key factors for its positive recommendation, including proven capabilities in the geothermal energy sector, which reduce the level of risk in projects; advanced technological capabilities; growth opportunities in markets outside the US; the fact that geothermal energy can supplement other renewable energy; and generation of strong cash flow, which supports the company's future growth possibilities. The Oppenheimer economists also cite the improvement in Ormat's profit margins.
Published by Globes [online], Israel business news - www.globes-online.com - on September 11, 2016
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